gerri: hello, everyone, i am

tracy byrnes and for gerri willis. it won't be long util more than $500 billion in tax hikes hit america's wallets. that isn't yours and mine. congress is out for held for a long weekend. john boehner skipping town. those sources say his meeting with the president failed to make any progress to avert the fiscal cliff. even if washingtodoesn't get its act together, there are steps you can take to lower your tax burden next year. you can empower yourself. in a moment, we are going to get advice from the founder and president of diverse financial consulting. it looks like congress will have no choice but to punt the fisca cliff debate until next year. we have a guest from the cato institute. sequestration kicks in, maybe talked about? >> i certainly agree with the sequestration part. should be able to find 100 belden and speing cuts. we should be able to find 50 billion in spending cuts on the front. i think the sequestration and

spending cuts should happen. unfortunately, many of the tax increases, if we don't do something about taxes, i think it makes it harder to go back and extend any of the tax cuts next year. so we might find ourselves in the worst of both worlds. i still give it about a 5050 chance that they come up with some sort of deal. but if they do, it won't be until christmas eve. tracy: for new year's eve at our? >> yes. tracy: most likely the deal will be extend middle-class tax cuts, wait until next year on the wealthy to discuss, basically we on everything until next year. when you do that, you know, you give up part of your bargaining power. should we come back in january and see a tax cut for the wealthy? >> republicans need to regain and have leverage. pushback against the president,

restate their position that it is not the spending issue. anything to kick the can down the road. any sort of real entitlement reform, i can see can't see that happening before the end of the yearr that is really driven by first, last, and second medicare spending. tracy: two thirds what comes in the country goes out the door to pay for all of these entitlements. you know, fox news did a poll. 61% of voters say we hav to cut spending. the american people get it. we all visited home all year long. the government is not giving in. if the republicans come back and say, you know what? raise taxes on say, if you make $1 million or more. but you have to give us the spending cuts. think somethinlike that would go through? >> my concern is, first of all,

we sort of concede the point that we should be raising revenue. it is important to keep in mind that there are two different issues. one is the short term short-term that we are in a recession. when the economy is strong again, revenues will go back out. people make moe money. we will be back. if we do nothing to extend all the tax cuts, we will be back to our long-term average of about 18 or 19% of gdp in taxes. without keeping these. tracy: it'a great point. >> we should be talking about the long-term budget deficits and these are driven by entitlement spending. i do think that you look at the biggest three things, medicare, social security, and defense -- they suld be on the table. i think we can do this without hurting the poor and we can cut back on medicare and social security in a way that doesn't sacrifice those at the bottom. i think that is doable. but he needed the programs under control..3 you need to get medical cost under control and unfortunately, the president's health care act, it will make medical expenses

higher and not lower. tracy: you make a great point. should obamacare be on the table during this discussion's? >> it is part of the fiscal cliff. whether it is increases on dividends or investment income, but keep in mind or the weaker parts of the economy has been business investments. why do we want to tax people in investing? that's what we want people to do to create jobs. it is the wrong time toraise taxes on things like capital investment. that's what was your economy. some of the worst tax increases are going to come about because of obamacare. tracy: that medical device taxes one of them. taxing on topline revenue. that is just ridiculous. an industry that is innovating and is making money right w. >> i am just going to pass it

on. there is a myth that is going to come out of executive bonuses or something. the reality is that health care industry will passhese tax increases on the consumer and will actually run a health care costs. at the end of the day, that's what drives her budget problem. tracy: speaking of budgeting, this hurricane sandy bill that has come across the table. we get a 600 billion-dollar bill for hurricane sandy date. surprisingly or maybe not surprisingly enough, we have $23 million for tree planting that is most likely not innew york or new jersey. $4 million for new equipment for the fbi and 2 million that is for the nixonianroot. do they think that we are stupid and that we are not going to realize what they're doing? >> they really must. i was working in the senate during hurricane katrina. just a wasteful process.

we basically gave a lot of these localities a blank check, and that is being what is proposed here. there are billions of dollars in replacement of vehicles for government officials. agencies should go back and get back to us rather than ask for a blank check they can buy new this and that whatever they put the money into a. tracy: that's right. we are talking about cutting defense, and yet we have 40 million appropriated military bases, including cuba. it makes no sense to me. what this says is they still don't get it. they still don't get the pages fill free to blow our money. >> i agree. what they did is they are trying to use the crisis of the recession to do a massive

stimulus bill that was nothing but a back to the own constituency area they are trying to use under the cover of hurricane sandy's relief, a bunch of things going to various parts of government and constituencies. what they should do -- i will say by contrast -- tremendous amount of waste good money spread everywhere, not just on the call. at least it wasn't packed with stuff that didn't even go to the victims. it will never end up helping individual families that were impacted. it is amazing that they are using this as an excuse to expand government. tracy: it is egregious but unfortunatel typical. thank you so much for being here with us today. >> my pleasure be one that is so sad. it is affecting confidence everywhere, especially in the small business world. our business confidence plunging to the lowest levels in history. this is according to the latest report by the national federation of independent

businesses. they feel that owners are fearing the worst when it comes to congress and the fiscal cliff. with more on the president's business policies, expert carol roth. i'm gl you're with us. i actually had the pleasure of interviewing the nfib chief economist. he said that youould've thought that confidence was down because of hurricane sandy, but it wasn't. it was because of the election. people fear the future. these are our job creators to absolutely. they are paralyzed. >> they are not sure what to expect. the longer we go on with fiscal cliff nonsense, and then we have obamacare, which then a lot of them will have to endure in some way shape or form, everybody is very concerned about that. in the face of uncertainty, the choices do nothing. it is very difficult to play a

game if yo don't where thh rules are. the small business community is kind of sitting on the sidelines awaiting, and that's not what we want from the job creators were country. >> it's interesting because we saw cap tech spending for big companies come to a screeching halt. we are starting to see it with small businesses now as well. everyone is just in this holding pattern, we? >> absolutely. a small business owner, a capital investment and hiring of an individual person is such a long-term name. it is such a bigger impact than it is for the company. they are taking those decisions and making them a lot more slow. they don't know what is coming up ahead. you are seeing it on the big business side, you're seeing it on the small business site. one of the things that is overlooked is how many small-business owners are being affected. you keep hearing the rich, the

rich, the rich. the rich are based on these 250,000-dollar cut off or more per year burners, a lot of small business owners get taxed for their income. tracy: this is important to point out. when yo are a small business, especially when you were you're starting out, you file a schedule see. it is part of your individual tax return. you bring in some business income, it is not a lot of money at the end of the day. >> it is not a lot of money. the number of small businesses and families is about a million that are effective. over 26% of those are small-business owners. i do not understand how taxing those small-business owners, who are supposed to create jobs, will help spur the economy. i think that is where the disconnect is. tracy: small businesses don't

have powerful lobbyists backing them up at the end of the day. although they do have you. there is one tax that you, like myself, you agree that should go back. >> yes, that is about payroll tax cut. i figure that one has to come off the table. that is basically taking money away from social security. i don't know what a month in social security with the rest of the general public. the fact of the matter is that you paint your pension. you paint your 401k. we need for people to pay into their future. social security is such a mess we can't afford to have come off the table. but i will tell you that if you take that and you take the obamacare tax, that is almost 1% of the gdp in terms of tax hikes. we cannot afford to have much more than that, especially with the kind of growth that we have. tracy: i agree that social security is drowning as it is.

carol roth, thank you so much. if you are fired up about this or any other issues, write us at gerri@foxbussiness.com. >> coming up on "the willis report", violence and destruction of private property by union members after the vote in michigan. but by? lou dobbs weighs in. apparently the federal government doesn't agree with spending problem because millions more of your tax dollars are about to be spent on new projects. ill break it down. and what is the difference between a 10-dollar bottle of wine and one that cost over 10,000? we talked one of the country's biggest wine retailers and found biggest wine retailers and found a surpri twins. i didn't see them coming.

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tracy: spending taxpayers money is only a federal problem. check this out. this atlanta mayor, approving the city council to receive -- wait for it -- 50% pay increase starting in 2014. do they not have tv in atlanta you heard it right. 50%. the council council members voted to raise their own pay earlier this month. these employers employees are also demanding that pays well. they are wanting to raise the income for these city employees. really? fiscal cliff? deficit? that? anyone? what steps can you take to lower your tax burden mr.?

we have dominant from diversified financiaa consultants. you talk with them leaders. what do they say? >> they are working diligently to get this compromise. if you look at the economic and tax issues facing us in 2013, it's going to go either bad or really bad. it is not going to be a compromise. there is not a good scenario coming out of the picture. even if they compromise, we are still going to be facing higher taxes and substantial cuts in entitlements and other programs. >> at the end of the day, that hurts gdp in the country? >> the projections by the cbo, if we go to the fiscal cliff and all these things happen -- it's going to reduce gdp by 4%. we go, plus 22 minus two -- that is the worst-case scenario.

one thing that is unwinnable in washington. we don't what they are going to do. 2% cut in gdp. >> 's. tracy: even if there is nobody changed, you are still going to feel the ancillary. all of that stuff -- >> you will feel it. when you get the firstpaycheck when it is $20 less per $100 less, your brain says i have to stop spending. i have to slow it down. i have to pay off debt. all good things in the long run. buin the first and second order of next year, borderline recession. tracy: people will go under their beds again. >> that is what happens. tracy: what can we do before the

end of year? what are you telling your clients? >> the ideas are how i capture losses. if we have the opportunity to shift income into next year, when do i book a piece of business? one-way make that income show up in the following tax year? to further attacks. paid tomorrow. why pay today when you can pay tomorrow. these conversations are literally 180 degrees different. you want capital gains today. you have until december 31. do not wait until the last minute. a 15% capital gains rate today. we don't know what it's going to be tomorrow. tracy: we are talking about short-term selling. we are not talking about things -- >> a great point. we always worry about taxes.

don't make any investment decision because of taxes. you want to separate the two. you are going to hold it for e next 20 years, we were the one. tracy: who knows what's going to happen. what about the real estate market? >> economy is to be slower in the first quarter second quarter of next year. but we have some game changers. energy, real estate, really has bottomed out. could add 3 million jobs over the next three or five or 10 years. the last one, there are a lot of people and companies holding a huge amount of cash back. $1 trillion being held back. if we solveis problem, that could cast it into the economy. a boost in the second corner. tracy: thank you for slogging through. founder and president. thank you. switching gears, later we will tell you about the best wine to give a the holidays.

in the meantime, we want to know what you think. what is your favorite and one viewport and i? red or white? logons gerriwillis.com and vote on the right-hand side of the screen. i will vote during the break. we will share the results at the end of tonight's show. coming up, d-day for obamacare exchanges. states across the country are telling the white house thank you, but no thank you. the federal government's latest green project. we will have the details coming up

tracy: governors across the country refusing to comply with

tracy: obamacare. decision day states will let washington know if they will

know if they will set up their own health care exchanges or what the federal government will do in regards to doing it for them. herewith the latest, peter barnes, the fox business senior correspondent. >> more than that. we have the full screen. 18 plus washington dc said they will create they're around. 26 states will let the federal government run it for them. six states chose a partnership as a test run to see who works. one of the most important pieces of obamacare the obama administration projected 23 million would

get health care insurance through the exchange by 2016. tracy: more than half. chris christie said no from the beginning. south carolina, louisiana, wiscons in said no. we will take matters into our own hands? >> governors like chris christie have big concerns how they may operate and the fed did not give all of the details on what they want them to be and standards. some governors held off for collison. >> part of the implementation is hhs wanted to wait until after the election and not wanting to politicize the.

but that eight away at the time it is available to implement. >> one of the things under obamacare is it can let the fed come in and set up then and set this thing up. decide to take it over some governors are not doing it because they oppose obamacare but others are concerned it is too risky them that the federal government ago first. tracy: you have a personal experience? >> i took a test drive. we had romneycare in massachusetts that set this up to be like the travelocity. it is fascinating.

you put it in your age and if you smoke and you get a menu of choices. of gold plan, as silver plan , of bronze plant, high ductible and low deductible and you get a price for that. massachusetts appears to be working. >> is there concern how the doctors are paid? >> the whole idea, a major part of obamacare is not to cover those a don't have insurance now control health care inflation. when a the outcomes is to empower the consumer rainout of third-party, the company

provides the health insurance plan and we pick appeal options. acute empower the consumer they will be smarter about shopping like a flat screen tv and of the cost goes down that should mean lower payments. tracy: but it could backfire because the doctors are not they aren't getting paid enough. paid enough. you will be all over this. that will affect the doctors down the road for kraft to the break we wilgonside no wine vault. what does the 10,000 bottle of wine the plight? do people drink it? but i will join a prominent wine merchant for exclusive

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tracy: chris miss it is around the corner and chances are someone would love a great bottle of wine. it makes a great gift if you can get a decent bottle for under $20 but we asked a prominent wine merchant who invited me into his store in rockefeller center. you may be surprised. holiday season i don't know what to bring. can i bring a decent bottle? >> i hold the bottle that is very decent it is from spain

and 1295 days doars in defense sense per bottle. >> i don't know the menu. >> that does not matter for dinner. most people think they will have it right then and there but most people have their own wine ready. it is more as a gift. you put so much time into the wind you pick. >> it is always safe to break a sparkled wind. tracy: i am in charge of matching. piano in a war? >> it is the easiest. smoothes and the perfect read.

>> my wife and i drink winn from argentina. every night white wine. tracy: started 1947? 1970 were on the map going from a really expensive bottle. >> i have the opportunity to tast the wine made clear year lincoln was shot. 1865. i decided it only had the opportunity once in my life. i went for it. i held the world record platt -- price of $520. it would be around $50,000 a

bottle today. tracy: that was a lot of money back then. >> 105 years old at the time. tracy: some of the most expensive models you cuddle that like good newborn child >> this is so expensive and precious. 1945. i did not know we had this. $9,100. just like real estate they do not make it any more. tracy: 1945? how long can you hold this? could i drink it now? >> of course. tracy: i would love to. >> you open to the abraham lincoln bottle.

[laughter] >> this was so vintage and powerful it last another 100 years. tracy: if i cannot get to manhattan how do i get it? >> online. tracy: amazing. he is delaying really well. he had won online sale the day before as $60,000. wine lovers. as we wrap up the year but what is the biggest thing to keep your eye on? looking the other way at a shocking violence that the union rally. lou dobbs is here. next.

tracy: spend a. spend. spend part of the model of the administration trillion dollar deficits the energy department announces $160 million plan to build more wind farms was bring in a senior fellow from the manhattan institute it is almost laughable britain said the offshore wind farm is not produce as much as three thought. it is not even a good idea we still spend money. >> it is agreed example to show the wind industry is the most favored in america

wis subsidies and mandates hang getting subsies under the national wildlife flawed no bearing more money at the offshore sector that would give expensive. tracy: the floating when the bill is out on the water somewhere slowly bringing power back? >> the portant thing to realize what is the cost of electricity that may be generated offshore? look at the data it is clear. the cost of offshore wind is 2.5 times from the onshore wind turbine and five times as natural-gas. it will be extremely expensive if it is built. tracy: more money and not as

much energy as we thought. what is the rationale? [laughter] part of the obama administration push all of the above strategy does not matter if it works. we should have a diverse portfolio for those that are viable. the view is not winter solar but in the shale revolution the subsidies are 10 times greater. why do we neglect oil and gas?

full-court press to get extended and and now the subsidize more than 20 years and then they could produce on their own without some cities thank you for being here. good times on a friday night. - big week for organized labor a stunning defeat in michigan and the right to work a lot that part was look covered but was largely ignored was this.

union members desperately a clinging to power violence violence, assault and destruction of private property. will anybody be charged? why are some looking the other way? lou dobbs joins us tonight. this infuriates you? >> at the same time we should get used to the fact that daschle liberal media will make coices that are inexplicable other than their own by as. what we watched it was conservative comedian being punched and he shows that he could take a pretty good punch but cbs, nbc left this part of the story out and so it did abc referred to the violence without specificity. they also left out

democratic state representative got a little carried away and started to talk about the undue 100 years of labor progress quote-unquote there will be blood record jimmy hoffa said there will be a civil war. this is the language that would is used time and time again but completely ignored by cbs, abc, and nbc it is truly remarkable. tracy: the president backs th? he was a jury is lease finance in wisconsin and now front and center. the president considered to

be part of the problem to talk about right to work is not economics politics. he knows better than that. he knows we have seen in right to work states improving employment while the forest union states where they have to pay dues, unemployment is higher. that has escaped the attention of liberal news outlets. tracy: you will talk about this? >> absolutely. with the attorney general of south caroli. and also in the middle east

dr. walid phares is who is the fox middle east news analyst and expert at the top of the hour. tracy: don't change the channel. tonight 7:00 and 10:00 p.m. eastern. 2012 is wrapping up. why aren't the market's reacting to the fiscal cliff next.

tracy: what is up with the market? with the threat of another

recession you think the market would be in the toilet. we have the chief investment strategist with us. all the indices up over 4%? >> the market is realizing in january 1st is a false deadline not lake yankee's. we know that will not happen. but it seems like we will get a solution or a range from the grand bargain or kicking the can down the road. i think this this gold cliff is priced appropriately.

tracy: before you said if we take a step back the companies have never been stronger. >> you grew up in the business with stocks. with this terrible sentiment is great for stocks technically speaking the s&p looks good earnings estimates so by editor measures stocks are great. tracy: i worried about the earnings season? >> and seems 1/3 quarter will be the trough. not gain busters but we thought four 5% but then next year could be double

digits. >> what is that? they cannot fall further? [laughter] >> i stay away from the money-center banks with balance sheet problems. tracy: bank of new york mellon. >> is on duralast. >> also allstate. tracy: illinois tool works? >> good global infrastructure play global impressed reassure is in the news and even today about to hurricane sandy relief. that wl help others. tracy: talk about apple. still on the list?

>> don't catch a falling knife. it is still on the list. tracy: you will talk about it again. fighting the traffic today. fighting the traffic today. what is the que twins. i didn't see them coming. i have obligations. cute obligations, but obligatio. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. [ engine revs ] ♪

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